Economists are warning home buyers they should expect four interest rate rises by August.
The Reserve Bank of Australia is now expected to raise the official cash rate from 3.1 per cent to 4.1 per cent in the next seven months, Deutsche Bank Australia senior economist Phil O’Donaghoe said.
That would put an extra $300 into the monthly repayments of a $500,000 mortgage.
And the hikes will likely start next week when the Reserve Bank meets, with a quarter of a percentage point rate rise on the cards.
The Reserve Bank, along with central banks across the world, is struggling to stem the rising cost of living. Australia’s annual inflation rate reached a 30-year high of 7.8 per cent in the December quarter.
In a December statement, governor Philip Lowe said the RBA “expects to increase interest rates further over the period ahead but it is not on a pre-set course”.
Deutsche Bank Australia senior economist’s Phil O’Donaghoe said home buyers should brace for the Reserve Bank to lift interest rates after their meetings in February, March, May and August.
He also expects unemployment to rise from 3.5 per cent to 4.5 per cent by this time next year.
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That would see a further 100,000 Aussies out of work.
Meanwhile, Brisbane property values have recorded their largest drop ever, barely seven months after peaking.
Following a pandemic population surge and increase in values of more than 43 per cent, Greater Brisbane home values hit a record high on June 19, 2022, soon after the Reserve Bank of Australia (RBA) commenced its as-yet unended rate-tightening cycle.
However, CoreLogic’s Daily Home Value Index (HVI) shows Brisbane’s home values dropped 10.9 per cent between the peak in June and January 28, the largest percentage fall on record.
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